Digital technology is disrupting industry after industry. The price of computing, data storage, communication, and coordination continues to plummet. Artificial Intelligence, sharing networks, crowdsourcing, crowdfunding, and digitization of old analogue processes are revolutionizing huge swaths of the economy. It's these trends that are radically changing the needs and behaviors of banking customers AND it's these trends that are now forcing the banking industry to revolutionize.

UBIQUITOUS SMART PHONES CAN ENABLE TRANSACTIONS WITH NO EXTRA HARDWARE

$1.6 TRILLION IN MOBILE TRANSACTIONS IN 2013 317% GROWTH FROM 2012

VISA AND MASTERCARD WANT TO OWN THIS SPACE TOO

BUT AT 3% OVERHEAD, NO GUARANTEE THEY’LL WIN!

MOBILE PAYMENTS WILL MAKE IT EASIER FOR NEW PAYMENT NETWORKS TO GROW ANALOGY: WHATSAPP, VIBR, SNAPCHAT, SECRET

MAKE ANALOGY TO CHAT NETWORKS ONCE YOU HAVE THE HARDWARE, SOFTWARE CAN SPREAD MENTION BITCOIN

Remittances totalled $534 billion in 2012, grows annually by ~8%, and accounts for more than 10% of the GDP in over 20 countries. Remittance is one of the most expensive forms of payment. The average cost for remittance in the first quarter of 2013 was 9.05%. At this rate, remittance operators will collect over $50 billion in fees this year. Remittance operators profit from transactions fees, margins added to currency exchange rates, recipient fees, cash payout fees, plus a variety of additional fees. In 2012, Western Union, the largest remittance operator, generated $5.66 billion in revenue with a net profit of $1.02 billion. These fees and margins would be excessive to anyone, but are especially burdensome to the people who use remittance most: low-income migrant workers and their even-lower-income families. “If the cost of sending remittances could be reduced by 5 percentage points…developing countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.”—The World Bank

Remittances totalled $534 billion in 2012, grows annually by ~8%, and accounts for more than 10% of the GDP in over 20 countries. Remittance is one of the most expensive forms of payment. The average cost for remittance in the first quarter of 2013 was 9.05%. At this rate, remittance operators will collect over $50 billion in fees this year. Remittance operators profit from transactions fees, margins added to currency exchange rates, recipient fees, cash payout fees, plus a variety of additional fees. In 2012, Western Union, the largest remittance operator, generated $5.66 billion in revenue with a net profit of $1.02 billion. These fees and margins would be excessive to anyone, but are especially burdensome to the people who use remittance most: low-income migrant workers and their even-lower-income families. “If the cost of sending remittances could be reduced by 5 percentage points…developing countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.”—The World Bank

US INDUSTRY IS LESS AND LESS CAPITAL INTENSIVE. A LONG TERM NEGATIVE TREND FOR LENDING.

2/3 OF MONEY IS NOW INSTITUTIONAL INVESTING LEAD INVESTOR IN LAST ROUND WAS GOOGLE

WHAT CAN BANKS DO? MOVE FAST IN A FAST CHANGING WORLD KEEP YOUR CUSTOMERS HAPPY UNDERSTAND YOU’RE NOT THE ONLY GAME IN TOWN KNOW YOUR ADVANTAGES – FDIC, STABILITY, CONVENIENCES DISRUPT YOURSELF BEFORE SOMEONE ELSE DOES

Transcript

1.
THE DISRUPTED
FUTURE OF BANKING
RAMEZ NAAM
@ramez

2.
[TEXT HAS BEEN ADDED TO SLIDES TO
MAKE THEM USEFUL WITHOUT A SPEAKER]
DON’T USE TEXT IN PRESENTATIONS